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Potential hotel/condo development envisioned for McGregor riverfront

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Submitted by admin on Tue, 06/05/2018 - 10:27

McGregor residents learned what a potential riverfront hotel/condo development could look like and cost during an informational meeting led by consultant Eric Tweten May 31. (Photo by Audrey Posten)

By Audrey Posten, North Iowa Times

McGregor residents learned what a potential riverfront hotel/condo development could look like and cost during an informational meeting led by consultant Eric Tweten May 31.

A 25-year veteran of the hospitality industry, Tweten was hired by the city earlier this year to explore development options for the former Holiday Shores Motel property. The spot has been vacant for nearly three years, after the city council denied a request from the property owners, Trilogy Partners LLC, to re-zone the property to allow for the construction of condominiums.

Tweten said a hotel/motel feasibility study commissioned in 2016 showed favorable potential for a new, 40-unit hotel in the community. A three-story mixed-use building with 40 hotel rooms on the first two floors and around five condos on the third floor would likely be the most cost-effective option, though, he explained.

“There’s even an off chance it could be a four-story building with two levels of condos,” Tweten suggested. “It depends on the equity raised and what it ends up costing.”

The building, said Tweten, would sit parallel to the Mississippi River. Fifty-three parking spaces would be created behind it, more if additional condos are developed.

The hotel would offer a mix of rooms, with the lion’s share containing two queen-sized beds. Other amenities would include a business center, fitness center, hot/cold breakfast area and bar area for small groups. A pool, along with a patio area, would be located on the first floor river side, providing visitors with a terrific view. For a small fee, it could even be used as a community pool.

“That’s a nice feature to add to the community,” Tweten said.

“The hotel,” he noted, “would probably be nicer than you’re thinking of in a small town. You’ll find the finishings and community spaces quite unique. It would be modern with a twist of local flair.”

He recommended going with a smaller, regional hotel brand, such as GrandStay, which is based in Minnesota. There are around 30 locations in the Midwest, the closest being in Ames and La Crosse and Mount Horeb, Wis. A small brand would offer fewer restrictions.

“You can do some things that are much more unique to the community,” Tweten said.

However, depending upon the ownership group that forms, he said the hotel could also operate independently, without any chain ties.

Tweten said the building’s third-floor condos would each be 1,800 square feet or larger, with at least two bedrooms.

“The condos would be laid out where everybody has a great river view,” he explained. “Otherwise, no one would buy them with a view of the parking lot and railroad tracks.”

Since the footings needed to create a deck off each condo would be too expensive, Tweten said a rooftop patio area developed solely for condo owners could be considered.

“You want to find as many ways as possible to make that part of the building their own—to make it as exclusive as possible so it’s as appealing as possible,” he said.

Part of the project plans include re-establishing two 180- to 200-foot-long galvanized steel floating docks. Giving condo owners an exclusive slip could be another perk, Tweten said.

A project of this scope will come at a hefty price tag: an estimated $4.8 million. Tweten said banks typically look for 25 percent equity from investors, which, in this case, would be $1.2 million. Options like negotiating utility costs, TIF, grants and loans could also aid the project.

“That private/public investment is critical to a hotel project,” he stated. “You have to find ways to turn rocks over to get the project off the ground. These are the hurdles you have to get through to make something of this size happen in small, rural America.”

It would be a 10- to 12-month project. With these figures, investors could expect a 2.5 to 4.9 percent annual return.

Tweten envisions an ownership group of 10 or more—mostly local—people for the project.

“Most hotels this size are not on the radar of most outside developers,” he warned. “It would happen because folks in the community want to see the community grow. The tricky part is always the equity, so right now it’s about seeing if people from the community are interested in being equity investors.”

Ownership, said Tweten, could be a LLC or other structure of choice. Investors could choose to be more actively involved or take a passive approach, hiring a strong local manager and staff, then meeting occasionally to review operations. He offered to work with people who are interested, providing help with everything from agreements, permitting and financing to layouts and construction.

Tweten said he’s met with Bruce and Lois Buchheit, from Trilogy Partners LLC, about his ideas.

“I felt it was important to visit with them since they own the land,” he said. “They’re open to it.”

They do not have interest in owning the hotel, though, he shared, but rather in buying a condo. Tweten said they assured at least 12 other people would also be interested in condominiums.

“A lot of legal things have to happen,” Tweten admitted. “It doesn’t happen without the collective—the land owners, condo owners and investors. All pieces have to come together to make it happen.”

If it does, the project will be something the city can be proud of.

“Hotels don’t necessarily bring home-buying jobs to town, but they allow people to stop in your community and spend money. That’s how people should think of lodging,” he remarked. “It helps pay many other bills in the community. That’s the real impact a hotel gives.”